prelim report, page-19

G'day Dhukka,

Your discussion of financial projections is both interesting and valuable.

On another forum (HC won't allow me to mention it by name) I have detailed a set of assumptions that lead to a dramatically different outcome than you have arrived at.

In summary, my assumptionas (for 2009 FY) are:

Sales: Double to $37.658m
Marginal COGS: 30%
Overheads: increase by 20%

Using those assumptions the profit comes to $12.751m

Add in Interest Income of $1.170m to give:

PROFIT 2009 = $13.921m

On that figure there will be no income tax to pay because of the carried forward losses. That figure would nicely wipe them out.

Now, my profit figure is significantly different from yours. The question we have to ask is - Why?

I will be the first to admit that my figures are, at best, intelligent guesses. Though I do make some attempt to give them some justification in my other post.

However, if my conclusion is wrong then one or more of the above figures must be wrong. The question now is - Which one(s).

If I do a rough comparison between my figures and yours we see that you have anticipated slightly higher Sales ($40m vs $37.658m). You have a lower GM (60% vs 70%) - actually mine is about 65% over the total sales so the difference is not great.

So, finally, the major difference between our numbers are the overhead costs. I calculate that your Overheads are $18m to $19m. Mine are $11.582m. Lets call it a difference of $7m.

As it turns out, then, you are predicting a doubling of Overheads for the doubling in Sales. I guess it's obvious that I disagree with that. I have made some attempt to justify my number for Overheads (in my other post). I would be interested if you have a reason for predicting a doubling of overheads.